A tour operator’s bold business decision calls into question the efficiency of the tailor-made travel booking process as the surge in travel strains understaffed businesses.
Tailor-made travel tour operator Authentic holidays began requiring a $99 refundable deposit for direct customers or travel advisors who want a representative to set up an itinerary.
The change was introduced as a way to weed out window shoppers who don’t commit to booking and to allow staff to focus on genuine inquiries that turn into sales.
According to industry experts, this is an uncommon decision for a tour operator, and one inspired by the travel counselors’ playbook: Agencies and counselors have long charged a service fee to avoid not waste their time on requests that are not serious. Travel Weekly’s 2021 travel industry survey found that the share of revenue from service fees increased from 18% to 27% from 2018 to 2020.
In the bespoke tour segment, however, service charges are rare. But with short-staffed tour operator call centers inundated with near-unprecedented volume, leading to long wait times, operators could reconsider the status quo.
Authentic Vacations launched the deposit in December, along with a $49 fee to use its online self-service itinerary builder called the Trip Planner App, when pandemic-induced staff cuts forced it to re-examine its activities.
After losing 50% of his team at the height of the pandemic and with his frontline sales teams reduced by 65%, CEO Simon Russell realized he was going to do more work with fewer people when travel would eventually resume.
Like most bespoke travel companies, Russell said, Authentic Vacations staff spent their time before the pandemic serving one of two types of customers through their call centers: “viewers” and “bookers”.
“Even with the best marketing, a high repeat rate, and a very experienced team, the best conversion you’ll get is maybe 30%,” Russell said. “So that means 70% of your work is wasted and you get no income from it.”
The time spent on spectators, as opposed to the money earned by bookers, has become harder for the company to ignore. In late 2020, Authentic Vacations began an 18-month overhaul of its approach to booking inquiries.
“We had nothing to lose,” Russell said. “We had time for our partners to get used to a different way of working before things got back to normal.”
Today, the company’s booking numbers are rapidly returning to 2019 levels.
“In a busy month before Covid, we were processing an average of 1,000 inquiries per month, converting 15% and getting 150 bookings,” Russell said. “With our new model, in a similar month, we only process 200 requests to get the same 150 bookings. [We’re] able to take more time on genuine requests, as they are now all genuine, and to organize even better trips for our customers.”
Skepticism about the business model
Knowing that growing demand and consumer willingness to splurge may not last, combined with the need to recover from the economic wounds of the pandemic, companies are more aware than ever of the value of their workers’ time.
Yet, in response to a request sent by USTOA and ASTA to its members on behalf of Travel Weekly, several tour operators said that collecting upfront deposits for time spent planning a trip is too risky a business model, that they don’t consider.
“TO EF Guided Tourswe will never require a deposit for a potential traveler to speak with one of our travel advisors,” said Jessica Trammell, EF’s vice president of marketing, who added that the company has a dedicated team to work one-on-one with “anyone interested in a travel experience.”
Goway Tourist attractionsRenee Stanton-Defaria’s sales manager said that while this could be “a model that other companies will follow”, Goway has no plans to do so. In fact, she said, booking request conversion rates are now improving compared to 2019.
“We believe this is due to our extensive in-house training and the qualification process we do with our travel advisors before initiating a quote,” she said.
Kathy Writer, President of Celtic tourssaid the company sees its fair share of window shopping despite its model, which collects deposits once someone wants to proceed with a quote.
“About 40% never reach an active reservation state,” Writer said. “Unfortunately, we still have a lot of work with no return. We are in a bit of a bind when it comes to streamlining work; if we reduce our services until the installments are paid, the travel agent will just look for another operator, or the complaints will come. So that’s hard to tackle.”
Travel counselors, however, say they charge these fees for the cost of their time.
“I’ve been charging hourly rates since I started my business 15 years ago,” said Nicole LeBlanc, owner of bespoke travel agency Mon Voyage Travel. “Any work before, during and after travel is subject to these fees, as my professional expertise and time have value.”